Uber Technologies Inc. told investors that it would have billions of dollars in cash at the end of the year, even in its bleakest estimates about the business’s prospects.
Uber’s shares soared 38% in New York, the most since the company listed last year.
The company’s projections about its cash position were meant to reassure investors that Uber’s business could withstand the economic shock caused by global social distancing measures. The pandemic is keeping people in their homes as they attempt to slow the spread of the virus, devastating the ride-hailing business.
Khosrowshahi said that Hong Kong, which experienced the coronavirus ahead of the U.S. and Europe, saw trips fall 45% and that the city is now 30% off of its peak. Still Khosrowshahi acknowledged, “every city is going to be different.”
Uber has said it would turn a profit this year, a goal that Khosrowshahi said the company was still aiming for. “We’re certainly targeting it,” he said in the Bloomberg TV interview. But he added, “I’m much more focused on tomorrow and next week.”
Khosrowshahi also said that when the crisis abates, the company would consider making acquisitions. “We’ve got a great opportunity to be a consolidator,” he said.
In an email to staff on Wednesday, Khosrowshahi also sought to reassure employees about the company’s prospects. “We are on incredibly solid financial footing,” he wrote in the email, obtained by Bloomberg. “We are asset-light and the majority of our costs are variable.” He urged staffers to take the plight of drivers seriously, writing, “We owe it to the millions of earners who use Uber to be there for them as much as possible.”
Uber’s stock has fallen faster than the rest of the market. The company’s value was $35 billion on Thursday. Uber’s market capitalization in its initial public offering almost a year ago was more than twice that, at $75.5 billion. But in the email on Wednesday, Khosrowshahi celebrated the company’s decision to go public. “Even though it was choppy, we raised a huge amount of capital,” he wrote, calling it “an incredibly important move.”
Uber had $10 billion of unrestricted cash as of the end of February, the company said. Of that, $1.5 billion is committed to acquisitions that have already been signed. Khosrowshahi also told investors that the company didn’t have “significant financial covenants” that could endanger the company’s cash position.
“We just thought it was important to update you quickly in such a dynamic situation,” Khosrowshahi said.